Seaprints, Inc., Herman H. Koster and Elisabeth Koster v. Cadleway Properties, Inc.

446 S.W.3d 434, 2014 WL 3928557, 2014 Tex. App. LEXIS 8805
CourtCourt of Appeals of Texas
DecidedAugust 12, 2014
Docket01-13-00860-CV
StatusPublished
Cited by15 cases

This text of 446 S.W.3d 434 (Seaprints, Inc., Herman H. Koster and Elisabeth Koster v. Cadleway Properties, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Seaprints, Inc., Herman H. Koster and Elisabeth Koster v. Cadleway Properties, Inc., 446 S.W.3d 434, 2014 WL 3928557, 2014 Tex. App. LEXIS 8805 (Tex. Ct. App. 2014).

Opinion

OPINION

MICHAEL MASSENGALE, Justice.

Appellants Seaprints, Inc., Herman H. Koster, and Elisabeth Koster filed a bill of review, seeking to vacate a 2007 default judgment entered against them in favor of appellee Cadleway Properties, Inc. The appellants claimed that they were never served with process and had no notice of the action in which the default judgment was rendered. Both sides of the dispute moved for traditional summary judgment, which the trial court entered in favor of Cadleway. However, because the appellants presented evidence corroborating their sworn denials of service, we reverse and remand the case for further proceedings consistent with this opinion.

Background

Seaprints, Inc., a corporation owned by Herman and Elisabeth Koster, secured a loan from the Small Business Administra *437 tion in 1995. The Kosters both personally guaranteed the loan. Later, Cadleway Properties, Ine. acquired the note. When Seaprints stopped making payments, Ca-dleway sued Seaprints and the Kosters to enforce the note and personal guaranties.

The parties dispute whether Seaprints and the Kosters were served with process. Curtis Wheeler, a licensed process server, executed affidavits of service for all defendants, stating that he personally delivered the citations at specified residential addresses to the Kosters in Seabrook, Texas, and to the registered agent of Seaprints, Mark Salbert, in League City, Texas.

At the time Wheeler claimed to have accomplished service of process, Elisabeth and Herman were separated and living apart from each other. Though the couple did not divorce until later, at the time Herman was no longer living at the marital home in Seabrook, and he had moved into an apartment in Kemah, Texas. Sal-bert claimed that he was not at his League City residence at the time he was allegedly served. In his affidavit, he declared that he had been at a pawn shop buying a carpet shampooer.

No party ever filed an answer to Cadle-way’s petition. On April 19, 2007, the trial court signed a default judgment awarding $11,295 and post-judgment interest to Ca-dleway. This document decreed that Ca-dleway “have and recover” judgment “from Defendant, Richard D. Cardenas”— a stranger to the lawsuit — and it did not specify a recovery from any defendant named in the suit. Recognizing the error months later, Cadleway filed a motion for judgment nunc pro tunc. On January 14, 2008, the trial court entered an “Order for Judgment Nunc Pro Tunc” and a new judgment substituting the three defendants’ names for “Richard D. Cardenas.” In their bill of review, Seaprints and the Kosters avowed that they had no contemporaneous knowledge of the judgment or these trial court proceedings.

Cadleway eventually sold the judgment to National Judgment Recovery Center, L.P., which in turn obtained a writ of execution. On the basis of this writ, in September 2012 a commercial building owned by the Kosters and located in Bra-zoria County was seized and sold at auction by the local sheriff. The purchaser at the sheriff’s sale was SOCA Funding, LLC. Though they had been divorced for several years by this time, the Kosters had continued to jointly own the Brazoria County property, and they had borrowed money from a bank using the property as collateral. In addition to the interest it acquired at the sheriffs sale, SOCA also purchased the note and deed of trust the Kosters had given to the bank.

The Kosters sued SOCA in Brazoria County, seeking to set aside the sheriffs sale. They had long leased the Brazoria County building to a commercial tenant. In their affidavits, they claimed that they first heard of the judgment against them when their tenant informed them of the sheriffs sale. They successfully obtained a temporary injunction requiring SOCA to conserve the rents it received and forbidding it from foreclosing.

In addition to the Brazoria County action, Seaprints and the Kosters filed a bill of review in Harris County, in the same trial court that had entered the default judgment against them. Naming Cadle-way as defendant, they alleged that a bill of review was proper as they never had received notice of the prior suit and they never had been served with process. They further argued that the judgment nunc pro tunc, substituting their names for “Richard D. Cardenas,” was improperly entered after the expiration of the trial court’s plenary power. They moved for traditional summary judgment arguing that the de *438 fault judgment against them was thus void because it was made at a time when the trial court lacked jurisdiction.

Cadleway also moved for traditional summary judgment. It argued that Sea-prints and the Kosters, in the face of affidavits of service executed by a licensed process server, failed to meet an enhanced burden of proof to demonstrate that they had not been served. Cadleway attached evidence to its motion, including:

• Wheeler’s affidavits of service for Seaprints and each of the Kosters;
• a transcript of the Kosters’ testimony in the Brazoria County proceeding;
• a sworn “Designation and Disclaimer of Homestead” executed by the Kosters in 2008, in which they both identified the house in Seabrook as their homestead and the residence they had occupied since 1991;
• franchise tax forms obtained from the Texas Secretary of State identifying the Kosters as officers of Sea-prints and listing an address for both at the Seabrook house;
• another affidavit from Wheeler in which he affirmed that he served the Kosters and Salbert (as registered agent for Seaprints), that he remembered having served them, that he remembered the location of their residences, and that he recognized the Kosters’ faces from their photographs;
• an affidavit from an employee of the Harris County District Clerk who attested that notice of the entry of the default judgment was automatically mailed to Seaprints and the Kosters at their last known address, which was the Seabrook house; and
• a certified copy of an abstract of judgment, reflecting a default judgment against Seaprints and the Kosters, filed in Harris County in June 2007.

The appellants filed a response to Cadle-wajfs motion for summary judgment to which they attached evidence, including:

• affidavits of the Kosters and Salbert, denying that they were served with process or had notice of the action and default judgment until they learned of the sheriffs sale;
• a copy of the 2009 decree of divorce dissolving the Kosters’ marriage;
• documents reflecting Herman’s home address in Kemah, including his Texas driver’s license;
• a copy of a receipt from EZPAWN in Webster, Texas, indicating that Salbert purchased a carpet shampooer less than half an hour before the time indicated on Wheeler’s corresponding affidavit of service;
• the affidavit of Diane Gillebaard affirming that the Kosters separated in 2006 and that Herman moved to an apartment that Gillebaard owned in Kemah; and

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
446 S.W.3d 434, 2014 WL 3928557, 2014 Tex. App. LEXIS 8805, Counsel Stack Legal Research, https://law.counselstack.com/opinion/seaprints-inc-herman-h-koster-and-elisabeth-koster-v-cadleway-texapp-2014.